Australia: S&P/ASX 200 (.AXJO) RBA decision in focus

Australia: S&P/ASX 200 (.AXJO) RBA decision in focus

Australia: S&P/ASX 200 (.AXJO) RBA decision in focus

Australian shares are poised to open higher to start the new fiscal year, bolstered by the weekend US-China trade truce and with investors positioning for a rate cut as soon as tomorrow.

ASX futures were up 18 points or 0.3 per cent to 6577 over the weekend. The S&P/ASX 200 shed 47.5 points or 0.7 per cent to 6618.80 on Friday.

The local currency was 0.2 per cent higher to 70.20 US cents.

Presidents Donald Trump and Xi Jinping agreed to renew efforts to resolve the trade dispute between their two nations during a meeting at the G20 in Japan.

Mr Trump said US companies would be allowed to sell their equipment to Huawei, and opened the door to further concessions later.

“We increase our odds of a deal over the next few months” to slightly more than 50 per cent, from 40 per cent prior to the meeting, TD Securities said in a note.

Mr Trump’s decision not to impose tariffs on the remaining $US300 billion more Chinese exports to the US “could spur a risk-on reaction as that tail risk gets priced out”, TD said, particularly in Chinese equities and the yuan.

Still, implementation and enforcement remain key sticking points for any deal. As well, TD said there was no timeframe set for further talks.

The truce should bolster sentiment for local shares as investors ahead of the Reserve Bank’s policy meeting on Tuesday.

The RBA governor’s view on the current state of the economy and policy is awaited.Bloomberg

NAB, for one, expects RBA governor Philip Lowe to announce a 25 basis point cut to 1 per cent tomorrow. “Governor Lowe has made it clear that the cash rate will likely be 1 per cent by August and we will take him on his word.”

TD Securities also is betting on a rate cut tomorrow, and given Mr Lowe’s comments last week, “not cutting [would] represent a major communications error in our view”.

Also betting on a rate cut this week: ANZ and Westpac.

“Regular readers will recall that on May 24 Westpac forecast a terminal rate in November of 0.75 per cent,” chief economist Bill Evans and senior economist Matthew Hassan said in a note on Friday. “This was ahead of all major forecasters and market pricing.”

Westpac expects the RBA to pare its growth and inflation forecasts by November, which will forestall credibly lowering its jobless rate forecast.

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 6,427.49.

The projected upper bound is: 6,747.01.

The projected lower bound is: 6,505.29.

The projected closing price is: 6,626.15.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 41.0783. This is not an overbought or oversold reading. The last signal was a sell 3 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 60.31. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 5 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 41. This is not a topping or bottoming area. The last signal was a sell 4 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 12 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed down -47.500 at 6,618.800. Volume was 16% above average (neutral) and Bollinger Bands were 86% wider than normal.

Open High Low Close Volume___
6,666.3006,670.1006,618.8006,618.800 754,153,728

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 6,633.62 6,430.93 6,069.21
Volatility: 11 12 14
Volume: 773,815,872 639,255,296 627,302,016

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

S&P/ASX 200 is currently 9.1% above its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .AXJO at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .AXJO and have had this outlook for the last 13 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.

You must be logged in to post comments :  
CONNECT WITH